July 31, 2019
David Toro
General Counsel and Chief Compliance Officer
StreetShares, Inc.
1900 Campus Commons Drive
Suite 200
Reston, VA 20191
Re: StreetShares, Inc.
Amendment No. 2 to Offering Statement on Form 1-A
File No. 024-10944
Filed July 17, 2019
Dear Mr. Toro:
We have reviewed your amended offering statement and have the following
comments. In some of our comments, we may ask you to provide us with
information so we
may better understand your disclosure.
Please respond to this letter by amending your offering statement and
providing the
requested information. If you do not believe our comments apply to your facts
and
circumstances or do not believe an amendment is appropriate, please tell us why
in your
response.
After reviewing any amendment to your offering statement and the
information you
provide in response to these comments, we may have additional comments. Unless
we note
otherwise, our references to prior comments are to comments in our May 16, 2019
letter.
Amendment No. 2 to Offering Statement on Form 1-A
Offering Circular Summary
Products
(c) Investing Products
StreetShares Notes, page 2
1. We note your response to comment 4. With respect to your disclosure that
all
StreetShares Note investors will have access to current information
regarding their Notes,
please revise to clarify, if true, that you also intend to include any
changes to interest rates
in a post-qualification amendment or a supplement to this 1-A.
David Toro
StreetShares, Inc.
July 31, 2019
Page 2
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Summary of Critical Accounting Polcies, page 27
2. We note your response to comment 10 and your inclusion of the ALL and
net charge-off
ratios on pages 28 and 29, respectively. Both ratios include reference
to discounts
associated with loans purchased with deteriorated credit quality.
Please provide us with
an enhanced understanding of these loans and revise your financial
statements to include
the relevant disclosures required by ASC 310-30. Alternatively, if
there are no loans
purchased with deteriorated credit quality, please advise and revise
your disclosure
accordingly.
Consolidated Financial Statements as of and for the Years Ended June 30, 2018
and 2017
Note 2 - Summary of Significant Accounting Policies - Impaired and Charged-off
Loans, page F-
8
3. We note your response to comment 18 and your revised disclosure on
page 28. Your
disclosure on page F-8 continues to state that loans with over 14 days
since last payment
are considered to be delinquent and impairments are applied which
appears to contradict
your revised disclosure on page 28 and your response to comment 18
that the only
impairment applied for the fiscal periods presented is a charge-off
for the full outstanding
balance of the loan. Please tell us, and revise your disclosure to
explain, the significance /
relevance of your disclosure surrounding loans over 14 days past due
considering there is
no indication elsewhere in the filing that these loans are considered
separately in your late
payment, non-accrual, impaired loan, allowance for loan loss or
charge-off policies.
4. We note that your response to comment 18 and your revised disclosure on
page 28
reference ASC 310-10-35 as the applicable authoritative literature to
support your
accounting. Your response to comment 25 of our letter dated March 6,
2019, and your
disclosure on pages 28, F-8 and F-30, state that the company evaluates
the
creditworthiness of the portfolio on an aggregated basis, which appears
to indicate that
your allowance policy is based entirely on ASC 450. Please tell us why
you reference
ASC 310-10-35 considering that it relates to the evaluation of loans for
impairment and
FirstName LastNameDavid Toro each of those individually assessed loans, in
light of the
identification of reserves for
Comapany NameStreetShares, Inc. and prior response indicating that the
company's allowance
aforementioned disclosures
July 31, 2019 Page 2is based on ASC 450.
methodology
FirstName LastName
David Toro
FirstName LastNameDavid Toro
StreetShares, Inc.
Comapany NameStreetShares, Inc.
July 31, 2019
Page 3
July 31, 2019 Page 3
FirstName LastName
Consolidated Financial Statements as of and for the Six Month Periods Ended
December 31,
2018 and 2017 (Unaudited)
Consolidated Statements of Operations, page F-26
5. We note significant variance in the amounts of Interest earned and
Interest expense line
items presented within Other Income (Expense). Please tell us and
revise your filing to
disclose the reason for the variance, what these amounts represent,
and how they differ
from Interest income and Interest expense presented within Operating
Revenue and Cost
of Revenue.
Note 13 - Subsequent Events, page F-46
6. We note your disclosure that effective January 1, 2019, the Company
began calculating
the credit loss exposure on the unfunded portion of the line of credit
based on expected
funding volume by date brackets of 0-30 days, 31-60 days, and over 60
days from
historical data and that this calculation had a material effect on the
Company's
consolidated financial statements of reducing the accrual and expense
for the credit loss
exposure. Please tell us the underlying reasons for this change,
quantify the impact of this
change, and explain to us how your methodology both before and after
this change was in
accordance with the applicable authoritative accounting literature.
You may contact Ben Phippen at 202-551-3697 or Amit Pande at
202-551-3423 if you
have questions regarding comments on the financial statements and related
matters. Please
contact Jessica Livingston at 202-551-3448 or Erin Purnell at 202-551-3454 with
any other
questions.
Sincerely,
Division of
Corporation Finance
Office of
Financial Services